Good morning. I’ll hold my hands up and saw that I wasn’t expecting to see the FTSE at -127 yesterday and down at 6650…. it even got as low as 6630 overnight, which considering I had mentioned 6635 yesterday but really not expecting it to be hit was a bit of a surprise! Europe slow down woes and ISIS bombing started were put forward as the reasons, but the US when it opened wasn’t quite as bothered, but sure was later in the day with the S&P hitting a low of 1975 after the close. Days like that i tend to find its best to stand aside once the identified levels break, it starts becoming more of a gamble rather than logical trades, and generally one just ends up losing money.
Asia Overnight from Bloomberg
Asian stocks pared a loss, with a rally in Hong Kong offsetting declines inAustralia and Japan, the dollar slid and bond risk rose to a three-month high after a selloff in U.S. equities. New Zealand’s currency gained from a one-year low after a smaller-than-estimated trade deficit.
The MSCI Asia Pacific Index lost 0.2 percent by 1:50 p.m. in Tokyo, dropping a third day as the S&P/ASX 200 Index slumped 0.9 percent in Sydney. A gauge of Chinese shares in Hong Kong climbed 1 percent from a two-month low. Standard & Poor’s 500 Index futures added 0.1 percent after three days of losses. The yen gained 0.3 percent to 108.57 a dollar, while the kiwi strengthened 0.4 percent after slipping as much as 1 percent last session. A measure of Asian credit-default swaps climbed one basis point to the highest since Sept. 1.
Australia cut its iron ore price forecasts as slower growth and a “cyclical downturn” in the housing sector in China sap demand amid rising supply. About $919 billion has been wiped from the value of global equities since a record on Sept. 18, amid concern the global economic recovery is wavering and on escalating conflict in the Middle East. Germany’s Ifo survey of business confidence is due today.
“Heightened concerns about geopolitical tensions in the Middle East, combined with renewed concerns about European growth combined to produce a risk-off environment,” Matthew Sherwood, head of investment markets research at Perpetual Ltd. in Sydney, which manages about $29 billion, said by e-mail.
Japan Resumes
About the same number of stocks rose as fell on the Asia-Pacific gauge, which traded at 13.6 times estimated earnings, down from the year’s high of 13.8 times on Sept. 3. That compares with 16.6 times projected profit for the S&P 500 and 15.4 times for the Stoxx Europe 600 Index.
Japan’s Topix index slid 0.6 percent after a holiday. SoftBank Corp., the Japanese company that owns more than 30 percent of Chinese e-commerce giant Alibaba Group Holding Ltd., was the biggest drag on the regional index, slumping 4 percent. Alibaba declined a second day in New York, losing 3 percent to $87.17 amid concern over the outlook for Asia’s largest economy.
Australia’s S&P/ASX 200 Index retreated after rising 1 percent yesterday. Prices for iron ore, Australia’s biggest export, slid 0.5 percent to $79.69 a dry metric ton at Qingdao in China yesterday, the lowest level since September 2009.
The Bureau of Resources and Energy Economics, Australia’s state commodity forecaster, reduced its iron-ore price estimates for this year and 2015 as rising production outpaces growth in Chinese demand.
The Hang Seng China Enterprises Index climbed after falling nine of the last 10 days and closing at a two-month low yesterday. The Hang Seng Index increased 0.4 percent with the Shanghai Composite Index advancing 0.9 percent.
Emerging Markets
“We’re still positive on China,” said Daphne Roth, head of Asian equity research at ABN Amro Private Banking, which manages about $218 billion, by phone from Singapore. “We still think economic growth is going to be around 7-to-7.5 percent.”
The Kospi index in Seoul added 0.2 percent. The MSCI Emerging Markets Index was little changed after four straight losses. The MSCI All-Country World Index fell 0.6 percent yesterday to a six-week low.
US
U.S. equities slumped as health-care stocks dropped and small-cap companies retreated for a third day. The S&P 500 reached its lowest level since Aug. 19, while the Russell 2000 Index (RTY) of smaller companies lost 0.9 percent, after sinking 1.5 percent Sept. 22.
FTSE Outlook
Todays pivot is 6700, a level that the bulls will need to exceed to target 6755 and a chance in tone on the FTSE, which is bearish obviously! Just below the pivot is the first resistance level for today at 6679, which is a back test of the bottom of the 10 day Bianca channel that it has broken out from. If it can get back within the channel then it will most likely hit the pivot. Support has been set at the overnight low of 6633, with 6620 and 6604 below that. If it hit 6604 then I would expect a bounce there as I still think there is some bull around, but maybe not getting going till next month.
When we break out from the daily channels it usually takes a few sessions to get back within them (talking the Bianca channels here), plus we have a PRT rising trend line at 6604, joining the lows in April and early August.